Myer profit drop expected

9 Sep 2012, 2:02 pm   -   Source: AAP
Underperforming department store Myer is expected this week to report a drop in annual profit. (AAP)

Underperforming department store Myer is expected this week to report a drop in annual profit. (AAP)

Myer is expected to report a drop in profits for the year to July 30 of around 15 per cent due to tough trading conditions.

Underperforming department store chain Myer is expected this week to report a drop in annual profit of as much as 15 per cent

Myer warned in May that tough trading conditions could lead to a further fall in profit, after initially expecting its profits for the year to July 30 fall by 10 per cent.

City Index analyst Peter Esho said he did not expect any surprises when Myer reported its full year results on Thursday.

"I think the result might come in line with expectations only because there's been a very slow resilience by retailers in the last few months," he said.

However, Myer's dividend to shareholders may be lower than expected as it reinvests in its stores.

"They need to re-furbish to remain relevant," Mr Esho said.

The retailer has been forced to shed 100 jobs this year due to the challenging retail climate.

In June its shares dropped to $1.69, their lowest level since the company listed on the Australian Securities Exchange in 2009.

Mr Esho said he was uncertain whether the company had the managerial ability and financial capacity to shift into the modern era.

He also questioned Myer's online strategy, saying while the retailer had been promoting its website it was still a very insignificant part of its overall sales mix.

"The attention it gives to online doesn't equate to its online earnings," he said.

Third quarter sales for the 13 weeks to April 28 were almost one per cent lower than in the same period in the previous year, at $651.1 million.

Like-for-like sales for the quarter, which strip out the effects of new store openings or closures, fell 2.1 per cent.

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